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Flexible retirement

A pair of feet, one in a slipper and pyjamas, the other in a suit and smart shoe

As long as you meet the minimum age requirement, your employer can allow you to reduce your hours or move to a lower grade and draw all or part of your pension benefits whilst carrying on working.

This sounds like quite a clever way of easing your way into retirement - and you still build up benefits in your ‘reduced’ job.

There is one drawback though... The benefits you draw when you flexibly retire may be reduced if you draw them before your Normal Retirement Age (although any 85 test protection will still apply).

Your employer may waive all or some of any reductions which may apply.

Good points

  • Could be a great way of easing your way gradually into retirement
  • Better work/home life balance
  • Rules don’t spell out how big a change in contract is required

Bad points

  • If you’re already a tax payer, you will pay tax on every penny of your pension
  • If you go for a big drop in pay, and your pension is small, you could be worse off financially
  • Please remember, drawing your benefits in this way is only possible if your employer agrees, in other words it is an employer discretion.

Other types of retirement

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